Tesaro Inc. (TSRO) shares fell more than 10% intraday on Thursday amid concerns over the price of its newly launched PARP inhibitor Zejula. The company announced that the drug’s wholesale acquisition cost would be $9,833.00 per month to $14,749.50 per month, depending on the dosage of 200mg or 300mg, which is higher than competing drugs from Clovis Oncology Inc. (CLVS) and AstraZeneca Inc. (AZN) that are priced lower than the high end of that range.
Many investors remain bullish on the prospects of its sans biomarker test niraparib as it moves toward approval in front line treatments rather than recurrent disease. After all, many patients may prefer to avoid biomarker tests due to their stress and uncertainty, making Zejula a compelling option. The growing popularity of PARP inhibitors among clinicians should also help improve sales as the addressable market for the class of drug grows.
From a technical standpoint, Tesaro recently broke down from the $140.00 neckline of a head and shoulders chart pattern. Traders should watch for a move lower to the 200-day moving average at $128.69 or the psychologically-important $120.00 level. However, the relative strength index (RSI) indicates that the stock is nearing oversold levels with a reading of 34.24, which means that traders may want to watch for a modest rebound before the decline.
Traders should keep in mind that the stock remains fundamentally-driven at its core with the potential for news flow to drive prices in either direction. In addition, the long-term trend is higher with the stock rising more than 200% over the past 52 weeks. Traders may want to consider stop losses a bit above the neckline to help mitigate these risks, especially because any short position would be against the prevailing long-term trend.
Author holds no position in the stock(s) mentioned except through passive index funds.